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Warning: If you do this, your second-hand goods could land you a Vat audit

by , 09 October 2014
SARS is very watchful when it comes to input tax claims. If it sees anyone try to claim input tax on something they shouldn't, they'll get a heft fine.

If you do this, SARS might even subject your company to an extensive Vat audit.

But you can avoid this, simply by following the rules, especially when it comes to second-hand goods.

Read on to find out why second-hand goods could land you a Vat audit...

 

Here's why second-hand goods could be the cause of your Vat audit

 
You can claim input tax on second-hand goods you buy for your business. This is known as notional input tax.
 
However, you'll need to keep a record of the details of those second-hand goods to do this. 
 
You need details of the person who sold the goods to you, a description of the goods and the amount you paid for them. 
 
This is where those second-hand goods often end up being the cause of a Vat audit. Vat vendors often forget to get these details. 
 
This means they can't complete the VAT 264 declaration that takes the place of a tax invoice.
 
Without this document, they have nothing to support their Vat refund claim and SARS audits them because of the error.
 
Here's what you need to do to ensure you don't make this mistake.
 
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Do you know how to:
 
•         Avoid a Vat Audit?
•         Claim every input tax credit?
•         Get your refund from SARS quicker?
 
 
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To claim input tax on second-hand goods correctly, you must do this

 
Whenever you buy second-hand goods, ask the seller to write down all their details and the details of the product. 
 
He must include the full product description and the amount he's asking.
 
You should then both sign this document. 
 
This gives you a legitimate supporting document to use to complete your VAT 264 and substantiate your claim so you don't incur a Vat audit.
 
 

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